F O R E S I G H T C O U R A G E P R O F I T S This issue went to print 09/23/05. Prices and margins quoted reflect levels at this date. OCTOBER 2005, VOLUME 18, ISSUE 12 Next page… email: taipan@taipangroup.com Urge to merge still
alive and kicking in
late 2005: Your chance
to cash in on one of
the hottest ongoing
trends It’s been five years now since the cat-
astrophic pop of the dot-com bubble left
a nasty mess all over the tech-heavy
NASDAQ market and broader American
economy. With the dot-com crash of 2000 now
firmly in the past, the climate has
almost come full circle. The sector has
finally shaken off most of the bad press
it garnered and the stigma that became
attached to Internet companies. The
enormous IPO’s of Google and Chinese firm Baidu are a testament to that and have made the sector
a promising bet again. With businesses spying value in the sector once again,
the big deals have also flowed freely. But while the likes of
big boys Google and Yahoo have launched themselves to the
top of the tree and grabbed the bulk of the headlines, they’re
far too big and expensive to be considered buyout candi-
dates. Rather, companies priced under US$1 billion are attract-
ing the bulk of the attention. And that attention is growing.
Dow Jones acquired economic and investment website
Marketwatch from CBS for US$519 million. The New York
Times Company bought search engine site About.com for
US$410 million. And Rupert Murdoch’s News Corp. snapped
up Intermix (parent company of the hugely popular
MySpace.com community website) for US$580 million. They’re just a few of the done deals. As Ian Cooper and
the Red Zone Profits investment team will explain in a
moment, there are many more where those came from.
When folks look back at 2005, it will go down as the “Year of
the Merger.” But of course, it wouldn’t beTaipan if we didn’t
give you a way to profit from this key economic theme—and Martin Denholm Executive Editor German political
gridlock hobbles EU:
Optimize your gains in
last bullish hurrah for
20 years With the German electorate voting
themselves into a political dead end in the
recent general election, it merely hammers
another nail into the European Union coffin.
The governing Social Democrats and oppo-
sition Christian Democrats finished virtually
tied, sparking widespread parliamentary
gridlock. This election was a confirmation of the
status quo—zero economic growth, bur- geoning debt, and 12% unemployment—and now means infinite
postponement of long-overdue welfare state reforms. For the EU economy, it’s yet another poke in the eye: Since
the beginning of the union, Germany has been the biggest net con-
tributor to European budgets. Despite missing the Maastricht directives—maximum debt no
larger than 3% [of GDP]—German Finance Minister Hans Eichel
had pushed through reforms that make punishment of deficit
offenders more difficult. In our view, the markets are poised for their last bullish hurrah
in 20 years. A combustive mixture of demographic forces and tech-
nology maturation might take the Dow Jones Industrial Average up
to 40,000 by late 2009. We also believe that a major financial crisis,
probably originating within China’s banking and currency system,
will rock the markets within 18 months after the 2008 Olympic
Games in Beijing. This crisis will create a bear market that will out-
last two presidential cycles. Europe will emerge from this crisis an
economic non-entity, its companies scattered all over the world, its
currency compromised, its prosperity squandered. Fortunately, you have time to optimize gains, pay off debt,
and learn the trading tools that will help you survive and prosper in
any market climate. Naturally, trading has risks. It’s the nature of
the game. Never risk more than you can afford to lose. Once you’ve
covered your liabilities, put our ideas to the test. Focus on a strategy
that fits your risk adverseness and overall lifestyle. J. Christoph Amberger Group Publisher
